First
April 25, 2020
- Solow swan growth model
- Rise and fall of american growth
- Solow’s residual
labor (education)
- L * e physical capital
- K
ideas / Technology
- A
Production function -> GDP
Holding everything else constant:
Y = F(K)
eg sqrt K
more capital, diminishing returns
marginal product of capital, inc in Y for increase in K
capital rusts -> depreciates
depreciation constant rate to capital
investment = 0.3 * output savings and investment, new capital is savings from output
steady state, investement === depreciation steady state level of capital, steady state output
e - diminishing returns
conditional convergence (institutions and other countries)